Different Types of Health Insurance Explained

Health insurance is a hot-button issue for most Americans, as many of these individuals either struggle to afford it or find themselves in need of some. In fact, health insurance accounts for 20% of premiums in the U.S., according to a study by the Kaiser Family Foundation (which is viewed as authoritative source). However, although some like Obamacare do help lower costs and offer more freedom, others have been skeptical that these benefits are worth the price tag. In this article, we will explain the most common types of health insurance: what their pros and cons are and why they are used.

We'll begin with health insurance for individuals. This is the most common type of insurance as it can be used to pay for treatments for illness and injury as well as everyday preventative care. In a nutshell, these plans offer comprehensive coverage in exchange for a premium that is typically paid monthly (although some plans have annual dues). This plan allows you to select your own doctor and hospital while providing coverage for treatment costs that exceed your deductible amount. These plans also provide preventive care at no added cost, although certain services may require a copay depending on the type of plan you have.

In addition, an individual plan usually does not cover a large number of lives, so you can not apply it to your whole family. This type of health insurance is suitable for individuals who are healthy enough to pay their own medical expenses but have no savings that would allow them to cover a major illness.

The disadvantage of applying this type of insurance is that it often requires you to pay high amounts upfront and there are no subsidies or discounts available. In fact, some taxes will also be withheld from your paycheck until the deductible period has lapsed (and then the money will be returned).

This type of insurance is also known as "solo" or "individual" health coverage because it covers just one person. Contrary to other types of health insurance, no one else can be added to the policy and it will expire if you cancel it.

For a further breakdown of this kind of plan, see this article on how medical insurance works .

2. Employer-Based Health Insurance

This is the most common type of health care coverage and it is provided by employers – mostly large corporations. This type of plan is offered to employees at minimal cost and their families are usually covered under the same policy. In addition, employers often opt for a high deductible plan as an incentive for workers to have supplemental cover in case things go wrong. However, if an employee becomes ill or injured on the job, the employer normally pays their medical bills as part of this plan.

The advantages of this type of health insurance are that it is affordable and is tax sheltered since it is not reported on your yearly taxes. Unlike the other two types of health insurance, costs will not be added to your monthly premium bill. However, there can also be a risk that when you get sick or fall ill that a significant portion of your compensation may be withheld from you until these expenses are covered (if you go over your deductible).

However, if an individual cannot meet these high deductibles and does not have enough savings to cover medical expenses, then this type of policy may be declined by an insurer. In addition, some large corporations do not offer this type of insurance and if you work for a small business then you may have to look elsewhere.

The obvious disadvantage of this type of health care insurance is that it is not portable since you can only take it with you if you work for the same company for an extended period. If your employer closes or moves their business then your health insurance plan will be terminated automatically.

However, if your employer is big enough or has a surplus of employees then they may also provide other benefits such as dental coverage, life insurance and disability coverage.

3. Government-Based

This type of health care insurance is available to individuals but it is mainly offered to those who meet certain criteria. For example, you can only apply for government-based health care if you are a part of an under-served community (such as an Indian tribe), have limited resources or live in an area that lacks medical facilities. This means that you have to pay your premiums upfront and the government will pick up the tab for your medical costs later on.

In addition, if you are looking for coverage such as mental health or prescription drugs then government-based health insurance may be your best option due to their extensive coverage. However, you must pay for a high deductible up front and the rest will be paid by your state. You can also qualify for subsidies such as free checkups or free vaccinations.

The biggest advantage of this type of health insurance is that it is affordable compared to other options and offers the most comprehensive coverage. However, if you have a pre-existing condition then you may be refused coverage so make sure to check with your state before applying.

In addition, government-based insurance may only cover certain treatments and services so some care providers may not accept them even though they are fully licensed in your area. You may also have to pay a large deductible if you are not satisfied with the care you receive.

4. Medicare

This is a federal program that is owned and operated by CMS. There are many different parts to the Medicare plan so it is important to understand them before you enroll in this type of health insurance. For example, Part A is available for those over the age of 65 or who become disabled, Part B is for outpatient care and Part D offers prescription drug coverage under a joint policy issued by CMS and private insurance companies. All in all there are over 30 parts to this program that cover almost every part of your health care. In addition, Medicare is funded through your payroll taxes and premiums that are paid for by both you and your employer.

If you are eligible for Medicare then you should automatically be enrolled in Part A (if you are old enough). However, enrolling in the other parts of the plan is voluntary but can save you money on medical costs. Part B requires a monthly premium that will be added to your monthly income tax bill. In addition, Part D or prescription drug coverage is not automatically offered so you must apply for these benefits.

You can also apply for supplemental insurance by contacting private insurance companies with which CMS has made agreements with.

Conclusion

As you can see, insurance is not as simple as it appears. This is why you should do some research on how insurance works in your area before getting started. In addition, you should also look for a company that offers the most competitive rates and does not charge a monthly fee. Finally, the best insurance plans will cover all the areas that are important to you including dental care and regular check ups (which is important for everyone to prevent chronic conditions).

The biggest disadvantage of this type of health care coverage is that it may be too expensive or too inflexible for your specific needs.